“Global Witness welcomes the progress and leadership of the
LME in introducing Responsible Sourcing guidelines for LME-listed brands,
particularly the requirements for brands
to publicly report on financial crime and corruption risks in line with EITI
and OECD standards, and on named individuals directly responsible for supply
chain due diligence within their supplier networks. These are important steps
for brands to demonstrate they are taking the impacts of their business
seriously.

“However, a few crucial weaknesses remain in the LME’s
responsible sourcing roadmap that hinder full and meaningful disclosure.”

Need for environmental and climate disclosure

“Crucially, the LME’s responsible sourcing rules and
guidelines do not take into account the serious environmental and climate risks
associated with their brand’s supply chains. This is a glaring omission and a
missed opportunity for the LME and their brands to take a lead within the metals
and mining sector in acknowledging and addressing the huge environmental impact
of the mining industry. This includes both environmental damage to biodiversity
and fresh water supplies, as well as the climate impacts caused by excessive
emissions in production and manufacturing, which conflict with countries’ carbon
reduction targets and the global Paris Agreement’s goal to limit global warming
to 1.5C above pre-industrial levels.”

“Moreover, the LME’s brands cannot fully address and assess
the human rights risks of their supply chains without also looking at the
environmental risks. The work of Global Witness and other NGOs has shown time
and time again that those
on the frontline of the battle to fight climate breakdown, preserve
ecosystems and protect their land from mining and other projects risk being
criminalised, attacked and killed. Human rights violations and environmental
abuses are therefore often intertwined and the LME must not ignore these links in
its responsible sourcing plans.”

“The LME is the largest Exchange for metals’ futures
contracts in the world. As countries shift toward low carbon economies and
electric vehicle fleets that rely heavily on these same base and battery
metals, like copper, cobalt, zinc, nickel and lithium, the LME must use its
leverage to ensure that these metals are produced and traded in a way that respects
people and planet. We cannot allow the path to a zero carbon economy to
come at the cost of lives in producing and manufacturing countries and further
environmental degradation in mining centres.”

“The LME must introduce environmental and climate disclosure
if its listed brands want to continue to attract institutional investors. It is
clear that environmental, social, and governance (ESG) risks and human
rights are now firmly on the agenda of institutional investors, and
non-financial disclosure is increasingly sought. As investors adapt to the
forthcoming EU regulation on ESG reporting, the LME should facilitate the move
toward greater corporate liability and responsibility, and ensure that
producers and listed brands move in this direction themselves, before the
institutional investor community are legally obliged to divest.”

“We also caution
the LME against over-reliance on industry schemes as a means of demonstrating
responsible business. Our research, and the findings of a 2018 OECD study, demonstrate
that participation in an industry scheme does not guarantee that an entity is
undertaking responsible sourcing in practice. Industry schemes can serve as a
veneer by which companies purportedly demonstrate “compliance”, and treat ESG
and human rights due diligence as a box-ticking exercise, rather than acting on
their responsibility to properly scrutinise supplier efforts.”

”The LME’s responsible sourcing rules will only be effective
if they ensure companies adequately disclose ESG and complex human rights risks
and their plans to mitigate these risks. Companies must be liable for the
degree to which they implement their social and non-financial responsibilities
in practice, and not simply on paper.”